Avoid the Race to the Bottom

Consumers often express that they want ethically-made goods or suggest a preference for American-made products. When it comes time to shop, most consumers aren’t ready to pay the higher prices required to cover the costs of such production. Likewise, from the the post The Race to Sell Chinese Goods to US Customers at Marketplace Pulse:

Customers, and the media talk a big game about manufacturing ethics, and the pressure on local retailers. And then they want a $9.99 t-shirt. Ethical supply chain is good, fast shipping is better, low price is best. This is why JD.com wants to enter the US market. Demand for low prices is as big as it ever was, and most customers do not care where the products are coming from. Majority of goods are made outside of the US anyway.

In my own experience with moving apparel production from China and India to the United States, we had a much harder time getting customers to pay full retail prices for domestically-produced goods. Many customers had expressed they’d pay more for American-made products. When the products came about, we received feedback that the prices were too high. Additionally, the increased production costs essentially cut out any possibility of wholesaling to past customers.

As an example of consumers preference for cheap products, even at the expense of speed, another quote from Marketplace Pulse:

Wish was the most downloaded shopping app in the US last year; they built it on having those $9.99 t-shirts for sale. Wish’s founder and CEO Peter Szulczewski recently said “One thing people are overlooking is that we have 600,000 merchants.” The vast majority of businesses that sell on Wish are based in China.

I’ve written previously about how Amazon commodotizes products. When that happens, the brand disappears in the eyes of the consumer. If a listing goes missing, nobody notices. That’s not where brands should be if they want to build a long-term business.

For our business, there was no real benefit to moving production to the United States. In fact, it was more difficult to find manufacturers and overall quality was arguably worse, yet we were asking consumers to pay more. Of course, this isn’t always the case.

There are consumers willing to pay more if they are given a reason. It’s likely not about where your product was made, but why it was made. Great products are made in China, just as they are in the US and everywhere else. Tell the story of the reason behind your product and why it was made to set your brand apart and avoid the race to the bottom.

Andrew @ EcomLoop
Are you looking to start or grow a standalone ecommerce shop? I help independent businesses achieve success on the Shopify and WooCommerce platforms. As the owner of multiple ecommerce businesses, I've had the opportunity to get experience with nearly every aspect of the ecommerce industry. I started EcomLoop to help other quality independent businesses using my knowledge and experience. To stay on top of new ecommerce developments, I publish The EcomLoop Weekly Loop, a blog and email newsletter with original thoughts and curated links to help independent businesses improve their businesses.